Briefing on Cooperatives Bill 2005

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Briefing on Co-operatives Bill 2005

• Presented by Nweti Maluleke

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Introduction

• On 05 December 2001 Cabinet agreed that the
  mandate for co-operatives development be
  transferred from DoA to the dti
• the dti had to develop a new policy and
  legislation that will
• promote development of sustainable co-operatives
  enterprises in all sectors
• ensure simpler registration process and
  management of co-operatives
• Ensure accessibility to the poor
• User friendly
• Developmental rather administrative
• promote equity and greater participation of
  targeted groups

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Shortcomings of Co-operatives Act 91 of 1981

• The focus of this Act is primarily on
  Agricultural co-operatives with all others
  categorized as trading co-operatives
• It was too prescriptive
• Catered for highly commercial co-operatives
• Registrar had more powers than members
• Definition of a co-operative not adequate
• Compliance with co-operative principles was not
  explicitly required from co-operatives
• The Act presupposes that the state plays a highly
  interventionist role

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Shortcomings of Co-operatives Act 91 of 1981

• Complicated registration process
• The language of the Act is too complex and
  inaccessible to the average member
• Provisions that protect interest of members vis a
  vis board of directors weakly articulated
• The Act did not provide for the formation of
  Advisory Board
• Cumbersome winding up process

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Objects of Bill/Purpose of the Act

• To repeal Co-operatives Act 91 of 1981
• To provide for formation of co-operatives and
  registration
• - to simplify the registration process
• To define co-operatives in accordance to
  international accepted definition
• To enable co-operatives to conform with
  co-operative principles
• To re-define the role of government in promoting
  co-operatives

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Objects of Bill/Purpose of the Act

• It gives power to the Minister of Trade and
  Industry to oversee the implementation of the new
  Act
• To provide legislative framework for all types
  and forms of co-operatives in all sectors of the
  economy
• To provide for protection of members interest in
  a co-operative
• Emergent co-ops
• To increase participation by targeted groups in
  the management of co-operatives and
• Role of government as facilitator through support

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Amendments addressing the shortcomings of the
old Act
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Definition of a co-operative

• Section 1
• contains a number of key definitions
• Definition complies with international accepted
  definition of the International Co-operative
  Alliance as adopted by ILO.
• also identifies different forms of co-operatives
  namely primary, secondary and tertiary
  co-operatives.
• defines co-operatives principles as
  internationally accepted principles of
  co-operation

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Definition of a co-operative

• Definitions
• A (primary) co-operative is an autonomous
  association of persons united voluntarily to meet
  their common economic, social and cultural needs
  and aspirations through a jointly owned and
  democratically controlled enterprise.

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DEFINITION, VALUES AND PRINCIPLES .Cont

• The universal principles of co-operation are
  explained
• Voluntary and open membership
• Democratic member control
• Member economic participation
• Autonomy and independence
• Education, training and information
• Co-operation among co-operatives
• Concern for community

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Application of the Act

• Applies to all co-operatives registered in terms
  of this Act
• Applies to Financial co-operatives
• Applies to all Schedule 1 co-operatives
• A minimum of 5 persons can register a co-op
• A minimum of two or or more in the case of
  secondary and tertiary

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Forms and kinds of co-operatives

• Section 4
• Clarifies the distinction between different kinds
  and forms of co-operatives
• Lists different kinds of co-operatives not
  intended to be exhaustive
• Does not prescribe kinds and forms of
  co-operatives that may be formed
• Section 5
• Detail provisions related to application of Act
• Section 6-12
• deals with simplified registration requirements
• Section 13-19 deals with a constitution and
  powers of a co-operative

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Interest of members vis a vis Board of Directors

• Sections 20-21
• Prescribes keeping of certain records to
  safeguard interest of members
• Section 22
• Deals with members right of access to
  information
• Provides for the election of supervisory board to
  oversee the Board of Directors
• Section 23-26 deals with membership of a
  co-operative- reduced to constitution
• - Powers of registrar
• Section 27-31 general meetings
• Provides that the Board of Directors is
  accountable to the general meeting where there is
  no supervisory board
• Section 32 40 management of a co-operative
• structures to manage a co-op
• Decision making powers of such structures

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Amalgamation, division, conversion and transfer

• Section 56-65 covers the above especially on
  conversion
• - conversion of both not only a co-op to any
  other form of juristic person
• - amalgamation which promotes sustainability
• -protection of creditors
• - transfers

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Winding up or de-registration

• Section 66-71
• The object of this section is to simplify the
  wind-up process and avoid unnecessary and costly
  litigation
• Explain circumstances under which a co-operative
  may be wound up.
• A co-operative may be wound up either by special
  resolution of its members or by order of the
  court
• Section 68
• Provides that a co-operative may be wound up or
  deregistered by the Minister in certain
  circumstances

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Administration of the Act

• Chapter 11
• The Minister will appoint the registrar and
  deputy registrars to administer the Act.
• It compels deputy registrar to keep records of
  co-operatives in a prescribed manner
• It allows a member of a co-operative to examine
  certain documents sent to the registrar
• It provides for the registrar to conduct
  inspection on suspicious dealings of a
  co-operative
• The registrar may make recommendations of the
  findings to
• The co-operative concerned
• The Minister in terms of Section 83
• The relevant prosecuting authority
• The Powers of the registrar in terms of
  this Bill is massively reduced to avoid
  constraints- decentralized approach

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Co-operatives Advisory Board

• Chapter 12 ,Section 80-85
• Provides for the formation of advisory board
• The main function of this structure will be to
  advise
• -the Minister regarding the co-operatives policy
• -the provision of targeted support programmes
• -guidelines for co-operatives audit
• This structure is necessary because
• Co-operatives supported by government policy are
  at an emergent phase
• Integrate to other related structures
• Once the movement is established the structure
  may be reviewed
• Members are appointed by the Minister and they
  must be capable of representing interest of
  co-operatives

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Co-operatives bill vs Co-operatives Bank bill

• The co-operatives bill provides for all types of
  co-operatives including financial services
  cooperatives
• National Treasury is the custodian of co-op bank
  bill
• The co-operatives bank bill provides for a
  deposit taking financial services co-operatives
• Financial services co-operative have to register
  under co-operatives bill before registering as a
  co-operative bank
• The financial services co-operative must comply
  with chapter 1and 2 of the co-operatives bill
• The registrar of the co-operative bank also
  assist in monitoring compliance with the
  aforesaid chapters
• The co-operatives bank bill is tailored to manage
  the risk associated with deposit taking from the
  general public

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Consultation

• All National and Provincial departments
• Provincial workshops
• Social partners (through NEDLAC) and
• The draft bill was also published in the Gazette
  for general public comments

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Concerns

• None

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Conclusion

• Thank you